Noble Group's earnings to remain under pressure even after the sale of its energy retailing unit

Noble passes on trading opportunities to conserve its liquidity position.

Noble may have reduced its debts after the successful sale of its energy retailing unit Noble Americas Energy Solutions (NAES), but the Group still has a couple of challenges to face.

According to DBS Group Research, while the sale of NAES for above book value is likely to boost sentiment in the stock, Noble's focus on its liquidity position has constrained the group's ability to take advantage of opportunities and generate profits.

"Noble’s earnings may remain under pressure in the near term as it passes on trading opportunities to conserve its liquidity position ahead of the receipt of the sales proceeds from NAES and the release of additional working capital in December," the research firm said.

To recall, Noble Group’s net losses jumped to S$73.8m in 2Q16.

“We believe it will take time for Noble to restore confidence in its business model given negative operating cash flows, volatile profits and various credit agencies placing Noble on a negative outlook,” DBS said.